Venture capital investments in clean technology reached an impressive $5.18 billion last year in North America and Europe. North American-based companies received three times the investments of the European-based companies. Not surprisingly, energy generation was responsible for $2.75 billion in investments, with solar energy shining.

“In 2007, solar emerged as a significant investment theme, and it was notable to us that of the top five solar deals of the year, three of the largest were solar investments in China and India,” said Cleantech Group Managing Director of Global Marketing Kristina Messdaghi.

Emerging solar technologies appear to be very promising, potentially dropping the cost of solar energy considerably. Nanosolar coating for example may lower the cost of solar energy to $1 a watt and does not require silicon. Over the last few years, this technology has received significant investment from venture capitalists.

Solar manufacturing capacity has been increasing considerably. Sharp Solar announced early last year that they will double production in Europe from 110 to 240 MW annually. Sharp increased production in Japan in 2006 to a staggering 600 MW. The Nanosolar plant in San Jose, California plans to produce 250 MW in 2008 and 430 NW in 2009.

Policy has helped fuel this increase in demand for solar energy. 20 countries in Europe now have electricity buy-back guarantee programs. 40 states in the U.S. have net-metering programs, with New Jersey, California, Colorado, Pennsylvania, and Maryland having highly regarded programs. Net-metering requires the utility companies to purchase surplus electricity generated from small-scale wind and solar systems, thus giving an incentive to system owners. Such programs also reduce the cost of residential solar and wind systems because they eliminate the need for batteries, while boosting the efficiency of the solar system.

Cleantech has certainly gained recognition by many venture capitalists and is seen by many as a lucrative opportunity. Many investment opportunities are also springing up for more casual investors with renewable energy mutual funds and exchange traded funds.